What Is Financial Literacy Month?
National Financial Literacy Month is celebrated in April. While financial literacy may sound uninteresting, a strong foundation of financial literacy can help support various life goals, such as saving for education or retirement, using debt responsibly, and running a business. If you consider yourself illiterate, you are not alone. No matter how long you have been learning, every day is a chance to reflect and learn how we can make smart financial decisions.
The History of Financial Literacy Month
The U.S. has a poor history of establishing standards for financial literacy, even though the concept of financial education and its importance as a life skill has been understood since our country began. Financial Literacy Month is not only a celebration but is a challenge.
There are records of Founding Fathers Benjamin Franklin and John Adams both writing about financial education. And more than 100 years ago, the Smith-Lever Act established the concept of formal financial education when the Cooperative Extension Service was created to offer outreach programs to educate rural Americans about a range of topics — among them personal finance.
In 2003, the United States Senate passed a resolution officially designating April as Financial Literacy Month. In an effort to make financial education a national priority, President George W. Bush signed an order in 2008 to create an Advisory Council on Financial Literacy. President Bush and U.S. Treasury Secretary Henry Paulson said the goals of the council were to expand Americans’ access to financial services, increase financial education for youth and adults, and promote research to measure the nation’s level of financial literacy.
The United States House of Representatives later passed a bill that supported the goals of Financial Literacy Month. The bill also asked the President to order the implementation of this month to the Federal Government, schools, localities, and non-profit organizations. It is said that the foundation of a bright future is to develop a budget and increase your financial knowledge.
But even with its extensive history and government backing, why do we still fall short when it comes to ensuring people have a good base in financial literacy to make informed financial decisions that will have an impact on the rest of their lives?
Why Is Financial Literacy Important?
Financial literacy is key to understanding how to save, earn, borrow, invest, and protect your money wisely. It’s also essential for developing financial habits that lead to your overall well-being. When you’re financially literate, it’s easier to plan your retirement, manage debt and live a comfortable life.
According to a study done in 2020 by the US Financial Literacy and Education Commission, only a third of adults could answer four out of five questions about fundamental finance — like inflation, interest rates, mortgages, and risk. Americans owe $800 billion in credit card debt and one-third say they are ‘just getting by financially’.
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